WIXLIB

yield in Ghana, estimated at 400 – 450 kg/ha, is among the lowest in the world (Ghana COCOBOD,2015).2Ghana is a net importer of basic foods (raw and processed) including rice, poultry, sugar,and vegetable oils. The annual food import bill now exceeds the estimated annual 2 billionearned from cocoa exports. Population growth, high rates of urbanization, and increasing incomesare driving the import bill as they lead to increased demand for more quality and safe foodstuffssuch as meat, dairy, and horticulture (fruits & vegetables). In 2015, food imports account for 16.8percent of total merchandise imports estimated at US 13.3 billion,3 and the food import bill isprojected to increase fourfold over the next 20 years, unless local production is substantiallyincreased.Ghana has significant agricultural potential, particularly in the semi-arid NorthernSavannah (agro-)Ecological Zone (NSEZ), including the Afram Plains. Ghana’s agriculturalpotential in the NSEZ remains mostly untapped. The NSEZ covers over 40 percent of the country’stotal surface area, and has about six million hectares of arable land with great potential forcommercial production of cereals, sugarcane, cassava, cotton, cashew, shea and livestock.However, agricultural production in the NSEZ is constrained by inadequate infrastructure(especially roads and irrigation) and other poor socio-economic indicators including low educationand skills, poor access to finance, complicated land tenure arrangements etc. These factors arecompounded by the semi-arid and arid climate which make the savannah particularly susceptibleto environmental degradation and climate change. Irrigation development should therefore receivetop priority in any effort to exploit the productive potential of the NSEZ.Key Constraints to sector growth and competitivenessLow Public Expenditure and EfficiencyGhana’s public expenditure on agriculture has been declining and lags behind the 10 percenttarget agreed as part of the Maputo Declaration. A recent public expenditure review of theagricultural sector by the World Bank estimates that spending on agriculture averaged about 5percent of total spending between 2001 and 2014; while also declining as a percent of total GDPsince 2011 reflecting tightening of the country’s fiscal position (Jansen, 2016).4 This includesfunding to the cocoa sector, implying that non-cocoa public expenditure might only be about halfof the estimated 5 percent. Ghana’s public expenditure on agriculture is among the lowest inAfrica, and considerably below the Comprehensive African Agriculture Development Program(CAADP) commitment of 10 percent (FAO, 2016).5 About two-thirds of the Ministry of Food andAgriculture (MoFA) budget is allocated for operational costs, with Development Partners (DPs)funding more than 70 percent of investment expenditures. Operational costs are mostly allocatedto salaries and input subsidies. This crowds-out expenditure on critical public goods such as accessinfrastructure, irrigation, research and development (R&D), and extension services, among others.Ghana Cocoa Board. 2015. The future of Ghana’s cocoa sector. “Building in robustness and resilience to What IF? ScenarioPlanning Report. Accra, Ghana.3 World Bank. 2015. World Development Indicators (WDI), global merchandise imports.4 Jansen, Johannes, 2016. Revitalizing agricultural growth through enhanced expenditure targeting. World Bank, Accra, Ghana.5 OECD/FAO, 2016. Agriculture in Sub-Saharan Africa: Prospects and challenges, for the next decade. Rome, Italy.26

There are also issues related to agricultural services which have been devolved to the DistrictAssemblies. Although Ghana has implemented its decentralization policy, but a lot still needs tobe done to give full meaning to administrative and fiscal decentralization, particularly for keysectors such as agriculture whose functions and services are needed most at the local level. Theprovision of agricultural extension and other services at the local level remains rather poor, mainlydue to low capacity and limited and untimely provision of public funding.A significant part of agricultural public expenditure is for input subsidies, yet evidence showsthat these subsidies are inefficient and generate low returns. The government providesfertilizer subsidies through MoFA as well as to cocoa farmers through COCOBOD. In 2016,MoFA provided subsidies on 180,000 metric tons of granular fertilizer at a cost of GH 120million and an unspecified quantity of organic fertilizer at a cost of GH 18 million, representingan average subsidy of 26 percent. In the cocoa sector, COCOBOD is the principal supplier offertilizers, pesticides and seedlings. The sustainability of these programs is of concern, given theirrising costs and ineffective targeting mechanisms. There are also operational issues, such as lateannouncements regarding if, when and how the programs are to be implemented each year,resulting in late delivery of fertilizers and creating substantial uncertainty for input suppliers andhindering the development and strengthening of private fertilizer supply networks in the country.(Houssou, Kolavalli, Silver, 2016).6 Where subsidies must be implemented in order to addressspecific market failures affecting farmers’ uptake of inputs, there is need to ensure adherence tothe principles of smart subsidies, including: (a) targeting farmers that need to learn about properuse of fertilizers; (b) targeting farmers that could use fertilizers profitably but are not able to do sodue to working capital constraints; and (c) delivering the subsidy through the private sector byusing modern voucher systems.Agricultural R&D, which is a key driver of productivity growth is inadequately funded andcoordinated. In Ghana, spending on agricultural R&D amounts to about 0.7 percent of agriculturaloutput (excluding cocoa), above the Sub-Saharan Africa average of 0.5 percent, but below the ratesof regional leaders such as Kenya (1.4 percent) and South Africa (2 percent) (IFPRI/ASTI, 2014).7This is also lower than the 1 percent target set by the African Union. Ghana’s institutionalmechanism for agricultural research and development is governed by the Council for Scientificand Industrial Research (CSIR). It is estimated that less than 4 percent of the budget annuallyallocated to CSIR is available to finance new operations. As a result, researchers are almost fullydependent on donor funding which is also limited.Significant productivity growth in agriculture requires a vibrant agricultural input supplysystem, particularly for seed. Ghana’s seed sector has undergone some significant changes in thepast few years, including the establishment of a new seed law and regulations, the appointment ofa National Seed Council, and the emergence of a more diversified commercial seed sector. Tripand Mensah-Bonsu (2013)8 reviewed factors critical to the development of the seed sector6Houssou, Nazaire; Kolavalli, Shashidhara; Silver, Jed. 2016. Agricultural intensification, technology adoption, andinstitutions in Ghana. Washington DC: IFPRI. 2016.7Nienke Beintema, Gert-Jan Stads, Keith Fuglie, and Paul Heisey, 2012. Global assessment of agricultural R&Dspending. Agricultural Science and Technology Indicators (ASTI) and International Food Policy Research Institute(IFPRI).8Trip, Robert and Akwasi Mensah-Bonsu, 2013. Ghana’s commercial seed sector: New incentives or continuedcomplacency. Ghana Strategy Support Program. International Food Policy Research Institute Working Paper 32.7

including procedures regarding variety release, seed quality inspection and certification; consumerprotection; access to breeder seed; provision of information to farmers; and seed prices andsubsidies. They also evaluated the traits of major public sector crop varieties, the nature of farmersseed demand, and the composition of the local seed industry. They concluded that the seed systemin Ghana is still largely dependent on public support (with minimal private sector participation),and the seed value-chain (from the production of breeder seed, foundation seed, its multiplication,and the production and distribution of certified seed) has inherent cost inefficiencies that invariablyaffect the competitiveness of the domestic seed industry. Furthermore, with the limiteddevelopment of the private sector in this important area, access to good quality seed amongsmallholder farmers remains a major issue.The coordination of agricultural sector investments in Ghana needs to be improved. Sectorcoordination is mainly done through the Agriculture Sector Working Group (ASWG) led byMoFA. The ASWG is a policy dialogue platform for engaging the Government of Ghana and itsDevelopment Partners (DPs). The ASWG coordinates the alignment towards the Food andAgriculture Sector Development Plan (FASDEP II), supports the implementation of the mediumterm investment plan, and facilitates the preparation of Joint Annual Sector Reviews. However,more needs to be done to strengthen ASWG’s impact on sector policy formulation, as well asmonitoring and evaluation. Over the last two years, MoFA’s participation and leadership has beeninconsistent. Furthermore, the funding of METASIP, including its steering and governancestructures remains inadequate. The coordination of the DPs’ support to the sector needs to beimproved. The framework and capacity to facilitate public-private partnerships (PPPs) in the sectorneeds to be strengthened to further private sector investment in agriculture.The collection and analysis of agricultural data/statistics is still weak and this underminesproper development planning in the sector. Ghana has not conducted a comprehensiveagricultural census for the past 32 years.9 In order to obtain annual production data, MoFA relieson Annual Crop and Livestock Surveys conducted at the district level by agricultural extensionofficers. However, given the limited public funding and other constraints affecting the capacity ofpublic officials, the quality of the data is often challenged.Impact of Climate ChangeGhana’s agriculture is vulnerable to the threat of climate change. Approximately 70 per centof the population directly or indirectly depends on agriculture and forestry. The agriculturalsector’s vulnerability to climate change effects threatens the food security and livelihoods of themajority who depend on the sector. While the diversity of agro-climatic conditions, productionsystems, and crops prevalent in Ghana lowers the level of aggregate risk for the agricultural sectoras a whole, the sector faces climate change effects whose causes, frequency, and severity varybetween regions, commodities, and years, with strong implications for localized risk managementstrategies. According to a report by the World Bank10, climate change is expected to adverselyaffect the stability of Ghana’s agricultural sector with the country’s millions of smallholder farmers9Quiñones, Esteban J.; Muñoz, Juan and Ngeleza, Guyslain. 2011. A Strategy for Agricultural Statistics in Ghana. GhanaStrategy Support Program. International Food Policy Research Institute Working Paper 32. According to this paper, the lastagricultural census in Ghana was conducted in 1984.10Choudhary, Vikas; D'Alessandro, Stephen. 2015. Ghana Agricultural Sector Risk Assessment: Risk Prioritization. WorldBank, Washington, DC. World Bank. 2498 License: CC BY 3.0 IGO.8

particularly vulnerable. The report also highlight that climate change is projected to accentuate therise in food prices in the future. While the price of rice is projected to increase 60 percent by 2015without climate change, it could go up by as much as 121 percent once climate change is takeninto account. Similarly, while the price of maize is projected to increase 60 percent without climatechange, with climate change this increase could be 153 percent. Northern Ghana is more vulnerableto increased volatility in weather patterns caused by climate change than the rest of the countrybecause it is poorer, drier and more heavily dependent on subsistence agriculture. It is thereforeimportant for Ghana to deepen the implementation of its National Climate Change Policy (NCCP)and the Agriculture Sector Implementation Plan, following the set principles in line with thecountry’s Intended Nationally Determined Contributions (INDC) towards climate changemitigation.Specific challenges affecting the Cocoa SectorCocoa is very important to Ghana in terms of rural livelihoods, foreign exchange earningsand employment, as well as being a key driver of sector growth. Cocoa accounts for about 7percent of the country’s GDP and 20-25 percent of total export earnings. Ghana is the second mostimportant producer and exporter of cocoa in the world, accounting for about 20-25 percent of totalworld supply. Total production increased from 400,000 MT in 1999-2000 to 1,000,000 MT in2011-2012, but dropped to about 850,000 MT in 2013-2014, and has been fluctuating between750,000-850,000 MT/year since.The cocoa sector’s low productivity threatens Ghana’s competitiveness and position in theinternational market. The low yields are a result of a multiplicity of factors such as age of thetrees, pest and disease infestation, and poor agricultural practices. According to a recentassessment by the World Cocoa Foundation (WCF, 2016),11 of the 2.6 million hectares undercocoa, about 23 percent have trees that are above 30 years old, and about 7 percent have beenaffected by cocoa swollen shoot virus disease (CSSVD). During the past decades, growth in totalcocoa output has been more a result of expansion of area under cultivation than yield increase dueto technical change.Ghana’s Cocoa Sector Development Strategy (CSDS II)12seeks to modernize Ghana’s cocoasector and promote climate smart cocoa and enhance the productivity of farms, but is yet tobe finalized and approved. The vision and strategy for modernizing Ghana’s cocoa sector isbased on three pillars: competitiveness, resilience, and robustness. To modernize and have a moresustainable cocoa sector, Ghana needs to be more: (a) competitive by increasing the productivityof cocoa producers and improve cost efficiency along the cocoa supply chain; (b) resilient tochallenges and risks related to global cocoa markets (demand and supply), and climate change;and (c) robust by being an industry leader through innovation and differentiation by focusing onhigh quality cocoa and niche markets.11World Cocoa Foundation (WCF), 2016. Cocoa Swollen Shoot Virus Disease: A holistic approach to control thedisease in West Africa.12Developed by COCOBOD with support from the World Bank, World Cocoa Foundation (WCF) and the RoyalNetherlands Embassy between January 2014 and March 2015.9

There is a need to reconsider COCOBOD’s cocoa inputs program for fertilizer, agrochemicals and planting materials. The Ghana Cocoa Board (COCOBOD) which governs thecocoa sector implements a distribution program for fertilizer, agro-chemicals and plantingmaterials. Cocoa planting materials (pods and seedlings) are supplied through its Seed ProductionDivision (SPD) and Cocoa Health and Extension Division (CHED) to farmers. Additionally,COCOBOD procures fertilizer and agrochemicals and distributes them to the farmers under itsCocoa High-Tech Program. Even though the distribution, as communicated within the publicdomain, creates an impression that these inputs are supplied for free, in reality farmers pay forthem th

yield in Ghana, estimated at 400 – 450 kg/ha, is among the lowest in the world (Ghana COCOBOD, 2015).2 Ghana is a net importer of basic foods (raw and processed) including rice, poultry, sugar, and vegetable oils. The annual food import bill now exceeds t